Fixed ops managers divided on posting service prices

December 18, 2017 12:00 AM

Rick Popely

Capitol Hyundai of Sacramento, Calif., like other dealerships in the Del Grande group, tailors online service menus –- including prices -- to individual customers.

Browse a dealership's website, and prices of new and used vehicles are likely to appear prominently.

Go to the same store's service site and prices for maintenance and routine repairs may be harder to find.

At a time when prices of almost everything are easy to find online, some dealers still resist posting how much they charge for an oil change or a scheduled maintenance visit.

Many say they fear that a competitor will undercut them with a lower price that includes fewer amenities but grabs the attention of penny-pinching customers.

"People are just too quick to look at the price and look past the value of what we do," says Robert Parnell, parts and service director at Westside Lexus in Houston, which doesn't post service prices online.

"We have to sell value," Parnell told Fixed Ops Journal. "We can't sell price."

Dealership service departments routinely tout their use of new original-equipment parts and the talent and experience of their factory-certified technicians.

Competing with aftermarket service providers on price is tougher.

Parnell says he typically charges $140 for 10,000-mile maintenance. That includes synthetic oil, tire rotation and an inspection with a report card that details the condition of various components.

He also provides service customers with loaner vehicles, free car washes and sometimes pickup and delivery. But because he can't place dollar amounts on such extras, he says it's hard to convey the added value of his services to customers who merely seek low prices.

Price is right -- or not

Arguments for and against dealerships posting service prices on their websites

Consumers expect to see prices of products and services — that's why they're shopping online.

Posting prices online means fewer customers will phone or email the dealership to ask about them.

Comprehensive maintenance menus let consumers see the value of the services provided.

Transparent prices put service customers at ease because they "know before they go."

Against

Aftermarket competitors can undercut dealership prices by using cheaper parts and materials and performing fewer services.

Online shoppers often focus on price and fail to notice the full value of dealership services.

Service prices vary based on such factors as a vehicle's engine; trying to price for every variable makes a website confusing.

Posting average prices means some customers will pay more than they expected, making them feel they were lowballed.

Parnell says his typical customer, the original or second owner of a late-model Lexus, cares more about time than a few extra dollars.

"They want it done right the first time," he says. "If I tell them it's going to take an hour to do something and it ends up taking two hours, I'm in a lot more trouble than if I'm $10 over the estimate."

Price transparency

Not all dealerships take the same approach. Del Grande Dealer Group, which operates 14 dealerships in the San Jose, Calif., area, says it practices transparency of service prices.

Del Grande customers can find how much maintenance will cost — to the penny — by entering vehicle and mileage information in the service scheduling portal on the dealership website.

The cost of 30,000-mile service on a 2015 Hyundai Santa Fe GLS, for example, is $187.13.

Tully Williams, fixed operations director of the Del Grande group, said he doesn't worry that competitors will poach his customers by advertising cheaper offers.

"The Jiffy Lubes and Walmarts will be out there forever," Williams says. "I don't want to be the cheapest.

"I just want to make sure that our pricing is market pricing, and I want to make sure I'm doing what the factory recommends, which nobody else can do," he adds.

The same maintenance menus that Del Grande posts online are available to service advisers to call up on their tablets. Because the menus match the schedules recommended by automakers and published in owner manuals, Williams says, customers know that the services performed are legitimate.

Moreover, he says, the prices quoted in the service lane are the same as the ones listed online.

Hybrid approach

Like Del Grande dealerships, Tom Gill Chevrolet in the Cincinnati suburb of Florence, Ky., shows online service menus that are applicable to a specific vehicle and mileage. But it does not post prices.

Mark Farney, the dealership's parts and service director, says customers may think the wrong price applies to their vehicle. The cost of an oil change for a Silverado, he notes, varies by whether it has a gasoline or diesel engine and whether it uses synthetic or conventional motor oil.

"If somebody picks something online that they think is their price, and when they show up it's different, you're in trouble," Farney says.

He says he doesn't worry about losing customers because his prices aren't online: "Your regular customers aren't out there price-shopping you."

Dealer software provider CDK Global sells a service pricing guide among its dealership management tools. It does not make specific recommendations about whether a dealership should post service prices online.

But Kim Saylor, a fixed operations product marketing manager for CDK, warns that prices advertised online must be the same that customers pay.

"If [dealers] have any doubts in their ability to price correctly," Saylor says, "then they are better off not including pricing" for service on their website.

One-price policy

Shaheen Chevrolet in Lansing, Mich., seeks to avoid service pricing confusion among specific models with a one-price policy for routine parts and maintenance such as oil changes, air filters and wiper blades. The dealership posts these prices on its website.

It charges $34.95 for a cabin air filter for any model, including installation. An oil change, tire rotation and multipoint inspection that includes an alignment check and car wash costs $39.95 with conventional oil, $49.95 with synthetic oil.

Trucks that require eight quarts of oil instead of six are charged $59.95.

Dave Wright, the dealership's fixed operations director, says Shaheen installs about 3,000 oil filters each month. Because the cost difference among filters averages out to a couple of pennies, he sees no need for model-specific pricing.

"Our cost is our problem, not the customer's," Wright says. "When someone asks how much for an air filter, it's always the same price, car or truck."

That policy also prevents service advisers from having to look up a price, potentially appearing poorly informed to a customer, he adds.

Wright says he doesn't worry that his prices are too high. "I want more than just the oil change," he says. "If someone is strictly shopping price, typically they're not going to be a very loyal consumer anyhow."

But Wright says it's essential to post maintenance and service prices online because consumers expect that.

Otherwise, he says, "They might think that you're charging so much that you're embarrassed about it."

A 2016 survey by Xtime, a subsidiary of Cox Automotive, found that 71 percent of consumers said that seeing a price estimate was "extremely important" or "very important" when they schedule service appointments.

Parnell, the Westside Lexus parts and service director who has resisted posting maintenance prices online, concedes he eventually will have to do so. He is mulling how to do that without resorting to what he calls misleading price gimmicks that he sees some repair shops use.

"At some point we're going to have to do it, whether we like it or not," he says. "I just haven't figured out how to do it where it would really give us a fair analysis."